3 Top Performing Healthcare Stocks to Watch

The healthcare sector has been a very strong performer in 2013, driven in part by a near 12 percent rise in the S&P 500. The iShares Dow Jones US Healthcare ETF

had climbed better than 19 percent and the SPDR S&P Biotech ETF

has also been outperforming the major averages with a gain of over 20 percent already in 2013. A total of 22 mid-cap healthcare stocks with market capitalizations greater than $2 billion are already up over 30 percent so far this year. Below, Benzinga takes a closer look at two of these stocks along with a micro-cap natural products company.

This company sports a market cap just south of $4.5 billion and the stock has been a Wall Street winner in recent years in the wake of FDA approval for its product called ADCETRIS. The drug was approved in August 2011 and led to a sharp spike in revenue for fiscal 2012. This corresponded with a steep uptick in the stock in 2012 which has actually accelerated in 2013. Over the last 5 years, SGEN has climbed around 260 percent, including a gain of around 60 percent in 2013 alone. ADCETRIS has been approved for the treatment of Hodgkin lymphoma and a rare lymphoma known as systemic anaplastic large cell lymphoma. The treatment is an antibody-drug conjugate that combines an antibody and drug which allows the antibody to direct the drug to a target on lymphoma cells known as CD30. In addition to its approved product, Seattle Genetics boasts a diversified pipeline of antibody-drug conjugates, putting the company at the cutting edge of cancer treatment research and development. The success of ADCETRIS and excitement about the company's pipeline has driven Seattle Genetics' valuation higher and higher despite the company only being projected to record fiscal 2013 revenue of roughly $221 million. As with most biotech stocks, uncertain future revenues make the stock risky to hold. The stock's largest holder is New York based biotech-focused hedge fund Baker Brothers Advisors LLC which has a near 16 percent stake in Seattle Genetics. The fund is run by brothers Julian and Felix Baker who have an outstanding track record of uncovering big winners in the biotech space. Julian studied at Harvard and has a business background while his brother holds a PhD in Immunology from Stanford. Given the trajectory of Seattle Genetics, the investment may end up being another huge winner for the Bakers and other biotech investors.

- This is another one of Julian and Felix Baker's picks that has been a standout stock in recent years. As of the fund's last 13-F filing, Baker Brothers Advisors LLC had a nearly 16 percent stake in the company. The returns in Pharmacyclics have been truly astounding over the last 5 years as the shares have appreciated almost 10,500 percent. Year-to-date, the shares are already up another 41 percent. The staggering rise in the shares has been solely the result of investor enthusiasm over the company's drug pipeline as the company currently has no approved products. The company's most exciting drug is known as Ibrutinib, which is being developed in collaboration with Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson

. Ibrutinib is a BTK inhibitor which has showed considerable promise in treating a number of cancers in clinical trials. The drug could be used to treat B-cell cancers, including including chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma (MCL), diffuse large B-cell lymphoma (DLBCL), and multiple myeloma (MM). Investors clearly believe that Ibrutinib has the potential to be a blockbuster cancer treatment which will generate billions in revenue down the road as the company currently has a market-cap of nearly $6 billion without any approved products. In addition to Ibrutinib, Pharmacyclics has a number of other products in its pipeline that could one day potentially produce revenue for the company. In recent years, this has been one of the most explosive biotech stocks in the market. Although it certainly appears risky to invest in the stock at these levels, investors have continued to be rewarded for their belief in the company in 2013.

- Irvine, California-based ChromaDex is a provider of research and quality-control products and services to the natural products industry. ChromaDex's expanding pipeline of scientific ingredients includes its branded pTeroPure pterostilbene and its BluScience line of dietary supplements. The stock differs substantially from the other two names outlined in this article in that it is a micro-cap valued at just $60 million and trades over the counter. As such, ChromaDex is a very risky and speculative investment. Nevertheless, the company reported another rise in sales in fiscal 2012, continuing a trend of four straight years of sequential revenue growth. Unfortunately, however, ChromaDex's roughly 7 percent sales increase in 2012 was accompanied by a wider net loss for the period. Although the stock price has been volatile over the last 52-weeks, experiencing a number of peaks and valleys, the shares were last unchanged on the yearly chart. In 2013, however, CDXC has posted a more than respectable 23 percent gain. The company is the leading provider of high purity phytochemical reference standards and reference materials to the pharmaceutical, nutraceutical, dietary supplement, food and beverage, and cosmetic industries. Its state-of-the art laboratory is based in Boulder, Colorado. Perhaps the most interesting aspect of the ChromaDex story is its largest shareholder who is none other than Opko Health's

billionaire Chairman and CEO Dr. Phillip Frost. The highly successful healthcare and biotechnology investor beneficially owns approximately 19 percent of the company. In addition to his position at Opko Health, Dr. Frost is also the Chairman of Teva Pharmaceuticals

, a $33 billion Israeli generic drug giant. The presence of such a prominent investor in a micro-cap name like ChromaDex certainly warrants attention and this is a stock to keep an eye on going forward.